China Taisan to raise $49.4 million in IPO

Published May 29, 2008
By LYNETTE KHOO

KNITTED fabric maker China Taisan Technology Group Holdings yesterday launched its initial public offer of 233 million shares at 24 cents apiece.

The 233 million shares comprise 223.2 million new shares and 9.8 million vendor shares. The IPO aims to raise net proceeds of $49.4 million for the company, which it plans to use to acquire new equipment, expand research and development, set up new sales and service centres, fund general expenses and for working capital.

The offer consists of 8 million public-offer shares and 225 million placement shares. The invitation shares represent 25.11 per cent of China Taisan's enlarged share capital and are offered at a historic price-earnings ratio of 4.7 times, based on FY2007 net earnings.

Giving a breakdown, China Taisan said the bulk of the proceeds ($38.2 million) will be used to acquire multi-track electronic tubular knitting machines, new face finishing and processing equipment to make peach finish fabrics, and computerised jacquard knitting machines.

Besides expanding R&D, the company will set up sales and servicing centres in Shanghai, Hong Kong and Xiamen, and boost marketing activity.

Daiwa Securities SMBC Singapore is the manager, underwriter and placement agent for the listing of China Taisan, which is scheduled to start trading on the main board on June 6.

For FY2007, China Taisan reported a 388 per cent year-on-year jump in net profit to 182.69 million yuan (S$35.9 million) from 37.4 million yuan, as revenue rose 265 per cent to 810.87 million yuan from 222.1 million yuan due largely to higher sales of performance fabric.

China Taisan's knitted fabric is used in the manufacture of sports and leisure apparel by international and local sports brands such as Umbro, Nike, Puma, Anta, Kappa, Lotto, Wanjielong, Eland, Adidas, Reebok, FILA, Mizuno, Diadora, Bossini, Giordano, Erima, Li-Ning, Qiaodan, 361°, Septwolves, Lilang and K-boxing.

China Taisan's chief executive Lin Wen Chang pointed to the Beijing Olympics in August, the Guangzhou Asian Games 2010 and Shenzhen World University Games 2011 as opportunities that will raise awareness of sports and fitness apparel and spur demand for it in China.

'Reputable apparel brands have also been rolling out new and innovative products with enhanced functions and characteristics, and we believe that will increase demand for our performance fabrics,' Mr Lin said.

Going forward, the group will focus on performance fabrics, he said. This segment contributed 93.3 per cent of revenue in fiscal 2007 and posted the highest gross profit margin of China Taisan's three business segments at 31.9 per cent for that year.

The acquisition of the equipment is expected to more than double production capacity for Spandex performance fabrics. The company will also expand its product range by introducing new performance fabrics with innovative functions, characteristics and designs.